Will Bitcoin bulls push the BTC price higher ahead of FOMC minutes release?


  • Bitcoin and Ethereum prices remained flat for the last week, as bulls await silver lining with FOMC meeting minutes release. 
  • The US Federal Reserve is expected to reveal why high inflation persists as the economy enters 2023.
  • Bitcoin price appears anchored but it is unclear when the asset will hit the current cycle bottom. 

Bitcoin and Ethereum are tightly correlated with a coefficient of 0.89 but both BTC and ETH prices remained largely unchanged over the past week in anticipation of the FOMC minutes release. The minutes of the US Federal Open Market Committee’s meetings are under the spotlight today as experts look for an explanation for why high inflation could persist in the economy. 

Concluding its December 13-14 meeting, FOMC policy makers published new projections for expected inflation in 2023 which were higher than previously thought. This has resulted in wider support from experts for an interest rate increase of over 5% in 2023, something which could push up the value of the US Dollar. 

The US Dollar Index is struggling to hold ground and if it falls following the minutes it would be positive for cryptocurrencies. The event, therefore, could turn out to be the year’s first silver lining for risk assets like Bitcoin which enjoy an inverse correlation with DXY. 

Will Bitcoin price break resistance at $16,900 as bulls anticipate FOMC minutes release?

BTC price remained largely unchanged over the past week. The US Federal Reserve has raised interest rates seven times in a row and the consensus among analysts is that this will repeat at the end of January 2023. 

The majority of the economists expect a 25 basis point hike to level off the trend from the US Fed. In the last meeting, US Fed Chair Jerome Powell admitted that interest rates would keep going up, however, the hawkish tone of the central bank did not have a significant impact on cryptocurrency prices. 

Bloomberg analysts believe that the Fed is expected to provide an explanation for why it anticipates high inflation to persist as the US economy enters 2023, in its minutes today. Fed officials revised their inflation forecasts for the end of 2023 and released them after their December 13-14 meeting. Experts are therefore supportive of the estimate that interest rates would need to increase over 5% in 2023. 

The largest cryptocurrency by market capitalization bounced from a possible entry zone at $16,615 and bulls are now targeting the $16,904 level.

BTC/USDT price chart

BTC/USDT price chart 

The Fed will publish the minutes of the FOMC meeting on Wednesday at 14:00 ET (19:00 GMT). 

Ethereum and Bitcoin remain tightly correlated

Based on data from cryptowatch, the correlation between Bitcoin and Ethereum is tight, at 0.89. The two large cryptocurrencies are in lockstep, therefore the altcoin is expected to mirror BTC’s moves. 

Digital assets including Bitcoin and Ethereum are not out of the woods, however, according to senior market analysts at foreign exchange cooperation OANDA. Edward Maya, senior analyst was quoted as saying:

This is still a difficult time for crypto as everyone waits to see which will be the next crypto company to fail. Regulation is taking its time but guidelines should start to take hold this year.  A top US regulator delivered a joint warning on crypto activities, which did not contain any new risks. Bitcoin appears anchored but it is still not clear when we will test and possibly make a new bottom.

The Federal Reserve, the Federal Deposit Insurance Corporation and the Office of the Comptroller of the Currency issued a statement,

It is important that risks related to the crypto-asset sector that cannot be mitigated or controlled do not migrate to the banking system. The agencies will continue to closely monitor crypto-asset-related exposures of banking organizations.

With agencies monitoring the spreading FTX contagion and highlighting the importance of crypto regulation, it remains to be seen whether interest and trade volume in Bitcoin and Ethereum steadies or declines. 

Why FOMC minutes could have a big impact 

Sources close to the matter argue that the minutes from December’s meeting could have a bigger impact due to members of the committee having been silent since the holidays. Traders setting up for the coming year will treat the minutes as the first explanation for the year of the US Fed’s take on inflation trends. 

The US Fed Chair was not the only hawkish member at the last meeting when the median rate expectation was boosted from 4.5% to 5.0%, meaning that the consensus among members is more hawkish than it was at the end of the third quarter.  


Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Recommended content


Recommended Content

Editors’ Picks

Ripple's XRP breaks out of downtrend as RLUSD receives greenlight from New York regulators

Ripple's XRP breaks out of downtrend as RLUSD receives greenlight from New York regulators

Ripple's CEO Brad Garlinghouse announced on Tuesday that the company received a green light from the New York Department of Financial Services on the launch of its stablecoin RLUSD. 

More Ripple News
Could Google's supercomputer crack Bitcoin? Crypto community maintains positive outlook

Could Google's supercomputer crack Bitcoin? Crypto community maintains positive outlook

Bitcoin faced mixed sentiments on Tuesday after crypto community members spoke on the potential of Google's new quantum chip Willow's ability to crack blockchain networks and render the security of public key cryptography useless.

More Bitcoin News
Crypto Today: Microsoft Rejects Bitcoin Reserve Plan, as Cardano, XRP Lead Market Rebound

Crypto Today: Microsoft Rejects Bitcoin Reserve Plan, as Cardano, XRP Lead Market Rebound

Amid an escalating geopolitical crisis, the global crypto market crash on Monday saw over $1.5 billion worth of liquidations, triggering double-digit losses across top-ranked digital assets.

More Cryptocurrencies News
Litecoin Price Prediction: LTC to hold $100 support as traders deploy $10M of leverage

Litecoin Price Prediction: LTC to hold $100 support as traders deploy $10M of leverage

Litecoin price broke below the $110 level on Tuesday, down 20% in a frenetic 24 hours as rising geopolitical risks triggered volatility across global crypto markets.

More Litecoin News
Bitcoin: Long-awaited $100K milestone meets profit taking

Bitcoin: Long-awaited $100K milestone meets profit taking

Bitcoin ends the working week hovering around $98,000 after a very volatile Thursday when it surpassed the $100K milestone and underwent a sharp correction. Strong institutional demand, whale accumulation, and the choice of a pro-crypto figure to lead the US SEC fueled the rally this week. 

Read full analysis
Best Forex Brokers with Low Spreads

Best Forex Brokers with Low Spreads

VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.

Read More

BTC

ETH

XRP